Labor Reforms Spur Up in France in the Wake of High Unemployment Rates

On August 31, 2017, France’s President Emmanuel Macron announced plans to reform the Code du Travail, France’s contested labor laws.[1] Macron, accompanied by Labour Minister Muriel Pénicaud, and government spokesman Christophe Castaner signed five decrees on September 22, 2017, implementing thirty-six changes to France’s labor law.[2] By adopting the Ordinances, Macron made good on his campaign promises to lighten the complex labor code in an effort to reduce France’s high unemployment rate.[3]

Macron is not the first President to attempt to reform the Code du Travail. However, after nearly three decades of failed attempts, Macron is the first to find success in passing reforms.[4] Macron’s success is likely due to his ability to pass the reforms through Ordinance.[5] Under France’s Constitution, the Government can ask Parliament “for authorization, for a limited period, to take measures by Ordinance that are normally within the scope of the law.”[6] The primary benefit to passing measures by Ordinance is the quickened implementation of the measures bypassing the lengthy parliamentary debates.[7] In order to legislate by Ordinance, the Government must obtain an Enabling Act from Parliament.[8] On August 1, 2017 the National Assembly passed the Enabling Bill and the Senate followed the next day, allowing the Government to move forward in “giv[ing] greater equality, freedom and security to employees as well as business owners by strengthening social dialogue.”[9]

The lengthy Code du Travail, has been criticized for contributing to France’s high unemployment rate and slow economic growth because of its stringent worker and union protections.[10] By increasing the ability for employers to negotiate directly with their employees, making it easier and less costly for employers to hire and fire, and giving small companies increased direct bargaining power the reforms aim to create a flexible fast moving economy.[11] Unions’ reactions to the reforms span across the spectrum. After engaging in extensive talks over the summer months with the government, the more moderate unions indicated they will not oppose the reforms, while the larger unions, like General Confederation of Labor, have engaged in massive protests opposing the labor reforms.[12]

The reforms to France’s Labor code are expected to have a wide-ranging impact on the countries that have adopted the euro. Karel Lanno, the chief executive officer for the Center of European Policy Studies has stated, “[t]here’s no long term sustainability for the eurozone if France is not managing to reform structurally like for example what Spain did, what Portugal did a bit, what Ireland did.”[13] If the labor reforms are effective in decreasing France’s high unemployment rate and stabilizing the economy, the European Union will likely have to rely on Germany’s “inflexible” economic policies.[14]

The reforms to the Code du Travail are only the first of many labor reforms Macron is expected to undertake to address the flexibility and modernization in the workplace to decrease France’s unemployment rate. While the reforms have sparked heated debate, the overall effects will likely take many years to notice.

[3]Id.; See also Republique Francaise, Legislating by Ordinance: a Standard Democratic Procedure, Gouvernement.fr (June 27,2017) http://www.gouvernement.fr/en/legislating-by-ordinance-a-standard-democratic-procedure (explaining while the Ordinance text comes into force after being published in the Journal Officiel, the text is not law until the Government introduces and parliament excepts a ratification bill.

[5]See Adam Nossiter, Macron Takes on France’s Labor Code, 100 Years in the Making, N.Y. Times (Aug. 4, 2017) (“Already the Parliament [. . .] has voted to let the president pass the reforms by ordinance, a shortcut past parliamentary debate and amendment.”).